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24 September 2020

Roku bullying Peacock into a deal is one sweet victory for OTT

Was it because Comcast revealed a week ago that Peacock had stormed to 15 million subscribers, rising 50% in just six weeks, that ended the impasse distribution deal with Roku? Or was it the fact that various streaming reports have unanimously named Roku the lockdown streaming champion?

Given how imperative it was for NBCUniversal to get its ad-supported Peacock platform on Roku, we expect it became almost a case of giving into virtually any demands Roku threw up. Who would’ve thought it – Comcast getting bullied by little old Roku, a company that a decade ago was a fledgling company peddling OTT hardware.

Disagreements over the split of advertising revenue was at the core of the stalemate, that have waged since Peacock launched in July. Roku states that it controls 30% of a channel’s ads when served on its platform, leaving the remaining 70% of ad inventory in control of the channel owner, in this case NBCU. Being the considerably larger entity here, it’s easy to paint Comcast/NBCU as the bad guy, although our instinct tells us that a 70% control of ad inventory was not enough control for a company of this stature, launching one of the most important services in the company’s history at an inflection point in viewing behavior changes.

Furthermore, we understand that because of Peacock’s alternative ad format ambitions, it was unwilling to let Roku control such a large portion of ad inventory – particularly when NBCU has invested huge amounts building Peacock’s back office ad tech platform.

Peacock was described pre-launch as providing the opposite to “ad nausea” which is prevalent in pay TV offerings. Peacock has pledged a maximum of 5 minutes of advertising for every hour of content, and those 5 minutes or less will comprise highly targeted and personalized ads. Here, NBCU has added Sky AdSmart inventory to its One Platform to bring advertising from multiple sources and delivery mechanisms under one umbrella.

Since acquiring Sky, Comcast has been busy integrating the Sky AdSmart addressable technology platform. Audience Studio, NBCU’s targeted ad technology, has been rolled into AdSmart, keeping the AdSmart name as an umbrella term for Comcast’s advertising technology.

It forms an advertising behemoth feasting on data from 50 million set tops – being put towards something called an AI-powered contextual media planning tool for TV. This entails slotting ads into relevant US content with the aim of bringing consumers an “organic viewing experience.” The original SkySmart ad technology was built around Cisco technologies.

Beyond targeting and personalization, NBCU has promised to get experimental with ads and this is where things get interesting. The Comcast-owned company recently revealed that 11 new advertising formats are being created for marketers – taking its total to 30 different ways of delivering ads.

One teaser format coined “1:1 Talent Surprise” will show live video chats between two brand representatives or celebrities during ad breaks. “Set on Set” and “Brand Experience” are two new features where brands can promote ads directly on the sets of shows, developed in collaboration with NBCU writers and producers, which sounds like it could be intrusive to the content and defeats the point of having dedicated ad slots.

That said, part of the breaking of bread between the two companies includes an ad tech partnership, although details here are minimal.

The spotlight is now firmly on HBO Max, which has found itself in a similar situation to Peacock. AT&T’s ad tech is also in something of a state of flux, with questions remaining about a possible sale of the Xandr division, which have likely hampered negotiations with Roku further. Now with Peacock getting the greenlight, it is more important than ever for HBO Max to strike a deal – as it misses out on an audience of some 70 million viewers in the US, and growing.